Home › Circulars › RBI/2026-27/69

NBFC Stressed Asset Resolution: New IRAC Norms & Provisions

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Current · Source: Reserve Bank of India · RBI/2026-27/69 · issued 29 Apr 2026 · ~2 min read
Quick answerRBI amends NBFC IRAC norms to align with stressed asset resolution directions. Standard accounts under a valid resolution plan can retain standard status; NPAs upgraded upon plan implementation. Additional 5% provisioning required on restructured debt, with write-back possible after 20% repayment.
The rule, in the simplest words
How it plays out — a real example

An NBFC compliance officer in Indore, Rohan, is working with a borrower who has been struggling to repay their loan. After implementing a resolution plan under Chapter VI-A, Rohan's team can now keep the borrower's account as standard, which will help improve their credit score. Additionally, they need to set aside an extra 5% of the loan amount as a provision, but this can be written back after the borrower repays 20% of the loan.

What changed

RBI inserted paragraphs 27A and 27B into the IRAC Directions, allowing standard accounts to stay standard and NPAs to be upgraded upon implementation of a resolution plan under Chapter VI-A of the Stressed Assets Directions. New paragraphs 36D-36F mandate an additional 5% specific provision on outstanding debt for each restructuring under that chapter, with write-back allowed after 20% repayment without fresh NPA or restructuring. Paragraphs 40A-40B specify accrual-based interest recognition for resolution plan accounts, except cash basis for repeated restructurings.

What it means for you

NBFCs must now set aside extra capital (5% per restructuring) for accounts resolved under the new stressed asset framework, increasing provisioning costs. The ability to retain or upgrade asset classification provides relief for genuine restructurings, but repeated restructurings face stricter cash-based income recognition. This aligns NBFC norms with the broader resolution framework, impacting capital adequacy and income recognition practices.

What you must do

Who it affects

All NBFCs (systemically important and non-systemically important), NBFCs dealing with stressed asset resolution under Chapter VI-A, Credit and risk management teams at NBFCs, Auditors and compliance officers at NBFCs

❓ Common questions

Can a standard account remain standard after a resolution plan?

Yes, if the resolution plan is implemented in adherence to Chapter VI-A of the Stressed Assets Directions, the account can retain its standard classification.

What is the additional provisioning requirement for restructured accounts?

NBFCs must make an additional specific provision of 5% of the outstanding debt for each restructuring under Chapter VI-A, over and above prudential provisions, up to a ceiling of 100%.

When can the additional provisions be written back?

The additional provisions can be written back after the borrower pays at least 20% of the outstanding debt, without slipping into NPA post-restructuring and without another restructuring.

📜 Read the original circular — full text as issued by RBI
Notifications - Reserve Bank of India Skip to main content Selected Selected Change Language हिंदी Search the Website Search Home About Us ▼ About Us Organisation & Functions ▶ Organisation Structure Departments Offices Training Establishment ▶ College of Agricultural Banking Reserve Bank Staff College College of Supervisors RBI's Functions and Working Governors Deputy Governors Executive Directors Communication Policy of RBI Sources of Information ▶ Annual Publications Half-yearly Publications Quarterly Publications Monthly Publications Weekly Publications Occasional Publications SDDS NSDP Data Releases Publications available on Subscription General Information RBI History Museum ▶ The RBI Museum RBI Monetary Museum Notification ▼ Notifications Master Directions Master Circulars Amendment Directions Draft Notifications/Guidelines ▶ Draft Notifications/Guidelines Draft Directions (RE-wise) Index To RBI Circulars Standalone Circulars Circulars Withdrawn Press Releases Speeches & Media Interactions ▼ Speeches Media Interactions Memorial Lectures Podcasts Publications ▼ Biennial Annual Half-Yearly Quarterly Bi-monthly Monthly Weekly Occasional Reports Working Papers Legal Framework ▼ Act Rules Regulations Schemes Research ▼ External Research Schemes RBI Occasional Papers Working Papers RBI Bulletin History DRG Studies KLEMS State Statistics and Finances Statistics ▼ Data Releases Database on Indian Economy Public Debt Statistics Regulatory Reporting ▼ List of Returns Data Definition Validation rules/ Taxonomy List of RBI Reporting Portals FAQs of RBI Reporting Portals Home Notifications Notifications ( 452 kb ) Reserve Bank of India (Non-Banking Financial Companies – Income Recognition, Asset Classification and Provisioning) Amendment Directions, 2026 RBI/2026-27/69 DOR.STR.REC.58/21-04-048/2026-27 April 29, 2026 Reserve Bank of India (Non-Banking Financial Companies – Income Recognition, Asset Classification and Provisioning) Amendment Directions, 2026 Please refer to Reserve Bank of India (Non-Banking Financial Companies – Resolution of Stressed Assets) Amendment Directions, 2026 dated April 29, 2026. 2. Consequent to the aforesaid Amendment Directions, in exercise of the powers conferred by the sections 45JA, 45L and 45M of the Reserve Bank of India Act, 1934; sections 30A and 32 of the National Housing Bank Act, 1987 and section 3 read with section 31A and section 6 of the Factoring Regulation Act, 2011, and all other laws enabling the Reserve Bank of India (hereinafter called the Reserve Bank) in this regard, the Reserve Bank being satisfied that it is necessary and expedient in the public interest so to do, hereby issues the Amendment Directions hereinafter specified. 3. These Amendment Directions modify the Directions as under: i. Paragraph 27A and 27B shall be inserted as under: 27A. If a resolution plan is implemented in adherence to the provisions of Chapter VI-A of Reserve Bank of India (Non-Banking Financial Companies – Resolution of Stressed Assets) Directions, 2025 dated November 28, 2025, borrower accounts which are classified as ‘Standard’ may be retained as such upon implementation. Borrower accounts which may have slipped into NPA between the date of occurrence of the calamity and implementation of the resolution plan, shall be upgraded as ‘Standard’, upon implementation of the resolution plan. Provided that after implementation of the resolution plan, the subsequent asset classification shall be governed by the criteria laid out in these Directions. 27B. Accounts which are restructured under paragraph 122E to 122L of the Reserve Bank of India (Non-Banking Financial Companies – Resolution of Stressed Assets) Directions, 2025 dated November 28, 2025, where a subsequent restructuring is necessitated under the provisions of Chapter VI-A of the aforesaid Directions, shall continue to be classified as ‘Standard’. ii. The following shall be inserted in Chapter II – Prudential Norms applicable to all NBFCs: C2. Additional specific provisioning in case of resolution plan implemented under Chapter VI-A of the Reserve Bank of India (Non-Banking Financial Companies – Resolution of Stressed Assets) Directions, 2025 36D. A NBFC shall make an additional specific provision of five percent of the outstanding debt in respect of borrowers, for whom a resolution plan has been implemented in terms of Chapter VI-A of the Reserve Bank of India (Non-Banking Financial Companies – Resolution of Stressed Assets) Directions, 2025. The additional specific provisions shall be over and above the applicable prudential provisions subject to a ceiling of hundred per cent. 36E. For accounts where repeated restructuring is necessitated in terms of Chapter VI-A of the Reserve Bank of India (Non-Banking Financial Companies – Resolution of Stressed Assets) Directions, 2025 , a NBFC shall make additional specific provisioning of five per cent of the outstanding debt for each instance of restructuring made under the aforesaid Directions. This additional specific provisioning shall be over and above the applicable prudential provisions subject to a ceiling of hundred per cent. 36F. The additional specific provisions maintained in terms of paragraph 36D and 36E above may be written back upon the borrower paying at least 20% of the outstanding debt with the NBFC, without slipping into NPA post implementation of the restructuring, and without being subjected to another restructuring. iii. Para 40A and 40B shall be inserted as under: 40A. Interest income recognition in respect of borrower accounts where resolution plan has been implemented in terms of Chapter VI-A of the Reserve Bank of India (Non-Banking Financial Companies – Resolution of Stressed Assets) Directions, 2025 dated November 28, 2025, shall be on accrual basis. 40B. For accounts specified at paragraph 36E of these Directions, interest income shall be recognized on cash basis. 4. The above amendment shall come into force with effect from July 1, 2026. 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Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2026-27/69 · issued 29 Apr 2026. The plain-English explanation above is BankPulse’s own independent summary.
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Key termsPlain-English definitions of terms in this circular — see the full Indian banking glossary. NBFC · CRAR (Capital adequacy) · Gross NPA (GNPA) · Wilful defaulter
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Who does what — compliance checklist
💰 Credit
  • Train credit and risk teams on the new classification and provisioning rules for stressed asset resolutions.
📜 Compliance
  • Update internal IRAC policies to incorporate paragraphs 27A, 27B, 36D-36F, 40A, and 40B for all NBFCs.
  • Calculate and set aside additional 5% specific provisions on outstanding debt for each resolution plan implemented under Chapter VI-A.
  • Ensure interest income is recognized on accrual basis for first-time resolution plans, and on cash basis for repeated restructurings.
  • Monitor borrower accounts to track 20% repayment threshold for write-back of additional provisions.
Grouped from the action items above — a single circular may involve more than one team.
Worked example & action-note template

Example: if you are a Compliance officer at a bank this circular applies to (All NBFCs (systemically important and non-systemically important), NBFCs dealing with stressed asset resolution under Chapter VI-A, Credit and risk management teams at NBFCs, Auditors and compliance officers at NBFCs), your first concrete step on “NBFC Stressed Asset Resolution: New IRAC Norms & Provisions” is: “Update internal IRAC policies to incorporate paragraphs 27A, 27B, 36D-36F, 40A, and 40B for all NBFCs.” (RBI issued this 29 Apr 2026).

  1. Circular: RBI/2026-27/69 -- NBFC Stressed Asset Resolution: New IRAC Norms & Provisions
  2. Issued: 29 Apr 2026
  3. Action required: Update internal IRAC policies to incorporate paragraphs 27A, 27B, 36D-36F, 40A, and 40B for all NBFCs.
  4. Action required: Calculate and set aside additional 5% specific provisions on outstanding debt for each resolution plan implemented under Chapter VI-A.
  5. Action required: Ensure interest income is recognized on accrual basis for first-time resolution plans, and on cash basis for repeated restructurings.
  6. Action required: Monitor borrower accounts to track 20% repayment threshold for write-back of additional provisions.
  7. Action required: Train credit and risk teams on the new classification and provisioning rules for stressed asset resolutions.
  8. Owner: ____________ Target date: ____________
  9. Board/committee approval needed? Y / N
  10. Evidence filed in compliance register on: ____________
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Official RBI source: https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=13428&Mode=0 — Plain-English summary by BankPulse (bankpulse.ai), reviewed by our expert reviewer, CA Amit Jain. Independent platform, not affiliated with the Reserve Bank of India; is our own plain-English paraphrase, not RBI’s original wording.
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